Europe's economy posts 13% growth as recovery accelerates

GDP across the European Union rose by 13.2% compared with the same period last year, and by 1.9% compared with the previous quarter, according to a preliminary estimate published Friday by the EU statistics office. The 19 EU countries that use the euro currency posted even stronger growth of 13.7% and 2% respectively, easily beating a Reuters forecast of 1.5%.
Unlike the United States, which posted second quarter annualized growth of 6.5% on Thursday, European GDP has yet to return to its pre-pandemic level.
Annual inflation across the euro economies also shot up, and could hit 2.2% in July, according to official EU statistics. That's higher than the European Central Bank's target of 2%.
Accelerating price increases were driven by rising energy costs (up 14% in July), food, alcohol and tobacco (up 1.6%) and services.
"The reopening of non-essential shops has seen retail sales leap back toward pre-pandemic levels, while there are signs that firms' investment plans are rising, which bodes well for continued growth," said Tej Parikh, a director at Fitch Ratings' economics.
"The economic momentum from the reopening is building going into [the third quarter], but a rise in cases of the Delta variant across the eurozone may pose a downside risk."
— This is a developing story and will be updated.